Is Zoetis Inc (ZTS) overvalued?
On Equity Rank's model estimate, ZTS trades close to its fair value (6% below it). Zoetis Inc (ZTS) last closed at $79.40; the multi-method model fair value is $84.59.
| Price | Model fair value | Price vs model |
|---|---|---|
| $79.40 | $84.59 | 6% below |
What the answer rests on
- 4 of 9 valuation methods put ZTS's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, ZTS's free cash flow would need to grow about 0.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 19.9% a year.
- ZTS trades at 13.7 times its last year's earnings, against a median of 21.4 for 17 profitable Pharmaceuticals companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 31% below to 3% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ZTS's fair value · What prices assume · Other companies